Lepak Takes USPS To Court Over Contract Dispute
Postal contractor Louis V. Lepak Co. is suing the Postal Service in federal court, accusing the agency of surreptitiously insourcing its contract and trying to hire away its drivers.
A two-count lawsuit filed Feb. 2 in the U.S. Court of Federal Claims accuses the Postal Service of ignoring federal law when it terminated the company’s delivery contract in the Oklahoma City area.
Along with the lawsuit, the company filed a request for a temporary restraining order and a preliminary injunction, to prevent USPS from taking further steps to terminate Lepak’s contract, recruit its drivers, or insource delivery in that region until the court case is resolved.
Lepak contends that the Postal Service kept the company in the dark about its plans to convert the Oklahoma City region into a Postal Vehicle Operator pilot program, saying nothing about the move when it renewed the family-owned company’s contract in late June for four more years. The pilot program was announced five months later by the American Postal Workers Union on Nov. 30.
The company received a termination notice on Jan. 12, stating that the contract would end after March 12, according to the filing. The company also says USPS has “actively solicited” Lepak drivers working the Oklahoma City contract, asking them to become postal employees. According to the suit, the Postal Service emailed the workers on Jan. 25, “asking that they confirm accepting a USPS employment position and be available to attend “New Hire Orientation” on February 11, 2023.”
Lepak’s lawsuit stresses that USPS informed the company multiple times that its contract termination was “not due to any issues with the service you have provided.”
Legal Dispute
The crux of the complaint is a stipulation in the Postal Reorganization Act (39 U.S.C. Section 5005(c)), which states that when the Postal Service is determining whether to use a contractor or perform the service in-house, it “shall use the mode of transportation which best serves the public interest, [with] due consideration being given to the cost of the transportation service.”
The company contends that this — coupled with existing legal precedent — requires the Postal Service to conduct an analysis when making such a change, something it failed to do in this case. The lack of an analysis was confirmed by the Postal Service’s Chief Counsel for procurement law, who disputed the company’s legal analysis by asserting in a Jan. 3 letter that the law only applies to outsourcing, the suit states.
In a separate filing, Lepak conducted its own analysis, and concluded that between driver wages and supervision, running the service in-house would cost USPS roughly $2.2 million more per year in salaries, while also driving up mileage and number of hours.
The first count of the lawsuit accuses the Postal Service of violating the law by not analyzing the cost differences first. The second count argues that by terminating Lepak’s contract without performing the analysis first, USPS breached its “implied duty of good faith and fair dealing.”
Louis V. Lepak is headed by Jeff Lepak, who sits on NSRMCA’s board as the Southern Region Vice President.